The response of small businesses to variation in the price of health insurance: results from a randomized controlled trial.

There is substantial interest in attempts to reduce the number of uninsured persons by providing subsidies to small businesses. To measure the responsiveness of small businesses to offers of subsidized coverage, the authors conducted a randomized controlled trial in which selected groups of San Diego businesses were offered the opportunity to purchase coverage at prices ranging from $20 to $100 per month for an employee-only policy. At $20 per month, an estimated 40% of eligible businesses purchased insurance; at $100 per month, 13% purchased insurance. Small businesses not currently offering insurance to employees are not very responsive to large reductions in the price of coverage. Programs to subsidize insurance for small businesses and their employees are unlikely to substantially reduce the number of uninsured persons.

Small firms' demand for health insurance: the decision to offer insurance.

This paper explores the decisions by small business establishments (< 100 workers) to offer health insurance. We estimate a theoretically derived model of establishments' demand for insurance using nationally representative data from the 1997 Robert Wood Johnson Foundation Employer Health Insurance Survey and other sources. Findings show that offer decisions reflect worker demand, labor market conditions, and establishments' costs of providing coverage. Premiums have a moderate effect on offer decisions (elasticity = -.54), though very small establishments and those employing low-wage workers are more responsive. This suggests that premium subsidies to employers would be an inefficient means of increasing insurance coverage. Greater availability of public insurance and safety net care has a small negative effect on offer decisions.

Productivity costs before and after absence from work: as important as common?

Traditionally, production losses are estimated using the human capital or friction cost method. These methods base estimations of productivity costs on data on absence from work. For some diseases, like migraine, productivity losses without absence are occasionally calculated by estimating the production losses from reduced productivity at work. However, diseases typically only associated with absence may also be expected to cause reduced productivity before and after absence. In a previous study, Brouwer et al. concluded that productivity losses without absence are also very relevant in common diseases, like influenza, common cold or neck-problems. Studying a new sample of employees of a Dutch trade-firm (n = 51), who completed the questionnaire 'Ill and Recovered' upon return to work after absence due to illness, it was revealed that about 25% of the respondents experienced production losses before absence and about 20% of the respondents experience production losses after absence. This leads to an increase in estimated production losses of about 16% compared with only considering absence data. Current productivity costs estimates based solely on absence data may, therefore, underestimate real productivity costs. Compensation mechanisms in firms may reduce the underestimation.

Indirect cost of ischemic heart disease to employers.

BACKGROUND: The management of healthcare programs by employers requires accurate information about the indirect and direct costs of important chronic diseases. OBJECTIVE: To determine the indirect costs of ischemic heart disease from the perspective of the employer in private industry in the United States. DESIGN: Indirect cost of illness analysis using the human capital approach, taking the perspective of the employer rather than that of society. METHODS: Ischemic heart disease was identified in a proprietary claims database of 3.1 million insured persons using an algorithm based on administrative codes. Economic data were derived from the Bureau of Labor Statistics, the Employment Management Association, and published sources. Work-loss data were taken from the National Center for Health Statistics' Health Interview Survey. The indirect cost was calculated as the sum of the costs due to morbidity and mortality. From the perspective of the employer, morbidity costs come from lost productivity, idle assets, and nonwage factors resulting from absenteeism and mortality costs are expenditures for replacing and retraining workers. This differs from calculations from the societal perspective, in which indirect costs are the value of an individual's lost income--both current and potential. RESULTS: The total indirect cost of ischemic heart disease to employers in private industry was $182.74 per enrollee. Ninety-five percent of the indirect cost was the consequence of work loss due to morbidity rather than of mortality costs. CONCLUSION: From the perspective of the employer, the indirect cost of ischemic heart disease is overwhelmingly due to morbidity costs.